Investors sue Nike for $5m, allege RTFKT shutdown was a rug pull

A cohort of non-fungible token holders has filed a class-action lawsuit against Nike over the abrupt shutdown of its RTFKT platform.

According to a filing with the U.S. District Court for the Eastern District of New York, the plaintiffs claim Nike carried out a “rug pull” by promoting sneaker-themed NFTs, pocketing profits from initial and secondary sales, and then shutting down RTFKT in January 2025, leaving holders with steep losses and worthless assets.

The lawsuit, led by an RTFKT holder, Jagdeep Cheema, seeks $5 million in damages and calls for a trial by jury to decide the claims. It accuses Nike of violating consumer protection laws and selling unregistered securities

Plaintiffs argue that the Nike NFTs meet the criteria for securities under the Howey Test, as buyers made an investment of money in a common enterprise with an expectation of profits tied to Nike’s ongoing efforts.

“As this type of digital asset is properly classified as a security under relevant law, the issuers of this type of token are required to register them and file relevant statements with the authorities and comply with relevant securities laws. The Nike NFTs were never registered as such,” the lawsuit noted.

Nike acquired RTFKT in December 2021, during the peak of NFT mania, positioning the move as part of its bigger push into the digital world. At the time, RTFKT was praised for blending fashion, gaming, and blockchain tech in ways that captured huge attention across the crypto and sneaker communities.

The studio quickly became a standout name, with projects like CloneX and Cryptokicks generating millions in sales. Early buyers were promised a gamified experience with quests, forging events, and exclusive drops that tied digital collectibles to real-world rewards.

However, as the broader NFT market cooled throughout 2023 and 2024, interest in RTFKT’s collections also started to fade

In December 2024, Nike announced RTFKT would wind down after one final release, the “Blade Drop,” describing the move as a shift toward preserving RTFKT’s legacy rather than an outright shutdown.

The plaintiffs argue that Nike’s withdrawal crushed the value of the NFTs, many of which had once traded for thousands of dollars, and wiped out promised ecosystem features like quests, rewards, and exclusive access to limited-edition products.

Nike and RTFKT had also allegedly promoted the NFTs with promises of peer-to-peer trading and an active ecosystem where completing challenges and forging sneakers would add real value

After the shutdown, those features disappeared, the secondary market dried up, and NFT prices collapsed almost overnight.

“Predictably, prices plunged and did not recover. Investors – some of whom are cited in this complaint – and the crypto community at large lamented Nike’s brazen rug pull,” the lawsuit added.